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DHCC > SEC Filings for DHCC > Form 8-K on 4-Apr-2014All Recent SEC Filings

Show all filings for DIAMONDHEAD CASINO CORP

Form 8-K for DIAMONDHEAD CASINO CORP


4-Apr-2014

Creation of a Direct Financial Obligation or an Obligation under an Off-B


Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Pursuant to a Private Placement Memorandum dated February 14, 2014, Diamondhead Casino Corporation (the "Company") offered up to $3,000,000 of Collateralized Convertible Senior Debentures (collectively, the "Debentures") to accredited or institutional investors. The Offering was conducted contingent on the deposit into Escrow of the purchase price for all of the Debentures offered in the principal amount of $3,000,000. The Debentures were offered in three tranches as follows:

Tranche 1: The Company offered $1,000,000 of First Tranche Collateralized Convertible Senior Debentures in the aggregate principal amount of $1,000,000 (the "First Tranche Debentures"), subject to certain conditions. The First Tranche Debentures are convertible, at a Conversion Price of $.30 per share (the "First Tranche Debenture Conversion Price"), into an aggregate of 3,333,333 shares of Common Stock of the Company, par value $0.001 per share ("Common Stock"). The minimum principal amount of First Tranche Debentures that could be purchased was $50,000.

A First Closing could occur and the First Tranche Debentures would be issued when and if subscriptions in the principal amount of $3,000,000 for all Debentures offered had been received in Escrow and accepted by the Company (the "First Closing"). On March 31, 2014, subscriptions in the amount of $3,000,000 were received in Escrow and accepted by the Company. Thus, the First Closing occurred on that date. The Escrow Agent released $1,000,000 to the Company and the Company issued First Tranche Debentures in the aggregate principle amount of $1,000,000. The First Tranche Debentures will bear interest at 4% per annum after 180 days and will be secured by a lien on the Company's Mississippi property.

The First Tranche Debentures will be converted to 3,333,333 shares of Common Stock when and if: 1) the Second Closing Obligations (as defined below) have been met; and 2) the average closing price of the Common Stock on the principal trading market for the Company's Common Stock is 150% or more of the First Tranche Debenture Conversion Price for the thirty consecutive business days immediately prior to such conversion date. The First Tranche Debentures will be converted into Common Stock without any required action on the part of the Debenture Holders and the lien securing the First Tranche Debentures will be released upon conversion.

The "Second Closing Obligations" are as follows:

1. The Company has filed its Annual Reports on Form 10-K for the periods ended December 31, 2011 and 2012, and any other Annual Report on Form 10-K that would have been required to have been filed as of the date of the Second Closing;

2. The Company has filed its Quarterly Reports on Form 10-Q for the periods ended September 30, 2011, March 31, 2012, June 30, 2012, September 30, 2012, March 31, 2013, June 30, 2013 and September 30, 2013, and any other Quarterly Report on Form 10-Q that would have been required to have been filed as of the date of the Second Closing;

3. The Company and its subsidiaries have filed their federal and state tax returns for the years ended 2011 and 2012;


4. The Company has held an Annual Meeting of Stockholders in accordance with applicable state and Federal law, at which the stockholders of the Company approved an increase in the number of authorized shares of Common Stock of the Company from fifty million to one hundred million, or the Company has otherwise obtained such approval by written consent of its stockholders pursuant to Section 228 of the Delaware General Corporation Law;

5. The Company is otherwise able to issue and deliver fully paid and non-assessable shares of Common Stock to the investors of this Offering in accordance with the terms of the Private Placement Memorandum;

6. The Company has obtained an updated property survey and preliminary engineering estimates for the construction of a casino/hotel on the Property;

7. The Company has obtained a site location engineering study identifying viable locations(s) for the placement of the proposed casino/hotel on the Property; and

8. The Company has obtained preliminary architectural estimates for the construction of the casino/hotel on the Property.

Tranche 2: The Company offered $1,000,000 of Second Tranche Collateralized Convertible Senior Debentures in the aggregate principal amount of $1,000,000 (the "Second Tranche Debentures"), subject to certain conditions. The Second Tranche Debentures are convertible, at a Conversion Price of $.45 per share, into an aggregate of 2,222,222 shares of Common Stock, on certain terms and conditions. The minimum principal amount of Second Tranche Debentures that could be purchased was $50,000.

At the Second Closing (as defined below), the gross proceeds from the sale of the Second Tranche Debentures in the principal amount of $1,000,000, will be released from Escrow to the Company. The Second Tranche Debentures will bear interest at 4% per annum after 180 days and will be secured by a lien on the Company's Mississippi property.

The Second Tranche Debentures will be converted to 2,222,222 shares of Common Stock when and if: 1) the Third Closing Obligations (as defined below) have been met; and 2) the average closing price of the Common Stock on the principal trading market for the Company's Common Stock is 150% or more of the Second . . .



Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Effective March 31, 2014, Deborah A. Vitale resigned as Chairman of the Board of Directors of the Company. Ms. Vitale remains a Director of the Company and its President, Chief Executive Officer, Treasurer and Acting Secretary. Effective March 31, 2014, Ms. Vitale resigned as President and Chief Executive Officer of Casino World, Inc., a wholly-owned subsidiary of the Company and proposed developer of the Diamondhead casino site ("Casino World"). Ms. Vitale remains a Director, Chairman of the Board, Treasurer and Secretary of Casino World.

Effective March 31, 2014, as a result of the First Closing, Edson R. Arneault was appointed a Director and Chairman of the Board of Directors of the Company. Effective March 31, 2014, Mr. Arneault was appointed a Director and President and Chief Executive Officer of Casino World. Mr. Arneault purchased $50,000 of First Tranche Debentures at the First Closing and has committed to purchase $50,000 each of Second Tranche Debentures and Third Tranche Debentures upon the Second Closing and Third Closing, respectively, if any.


From 1992 through 2008, Mr. Arneault served as Chairman, President and Chief Executive Officer of MTR Gaming Group (NASDAQ: MNTG), a publicly-traded company. Mr. Arneault has significant experience in the gaming industry and, though not currently licensed, has previously held gaming licenses in Pennsylvania, West Virginia, Ohio, and Nevada. Since 2009, Mr. Arneault has served as President of New ERA Consulting, which provides marketing, government relations, capital formation, financing, and human resources consulting services to various companies. Since 2009, Mr. Arneault has also served as a principle and co-CEO of Braneault Enterprises, LLC, which advises political, commercial and entrepreneurial enterprises in all facets of marketing management. Since 2001, Mr. Arneault has served as a co-host of "Black and Gold Sunday," a sports program on KDKA radio. Since 1981, Mr. Arneault has served as President of Century Energy Management Co., Inc. and its predecessors, an oil and gas operating company founded in 1980, which has drilled and operated numerous gas wells.

Mr. Arneault is also a member of the American Institute of Certified Public Accountants and was previously licensed as a CPA in Michigan, Ohio, and Louisiana. Mr. Arneault has worked as a tax partner with Seidman and Seidman (BDO Seidman) and as a tax consultant for Arthur Andersen & Company. Mr. Arneault was a Distinguished Military Graduate and served as a Captain in the United States Air Force from 1969 to 1972 and on active duty in the Middle East, Africa and Asia.

Mr. Arneault will receive a salary of $300,000 per annum for services rendered as President and Chief Executive Officer of Casino World. Actual payment of all or a portion of Mr. Arneault's salary will depend upon the financial status of the Company and receipt of additional financing. In the event the Company does not have sufficient funds to pay Mr. Arneault, it is expected that his salary will be accrued.

As of the date of this Current Report on Form 8-K, there are five Directors of the Company, as follows:

1) Edson R. Arneault
2) Deborah A. Vitale
3) Gregory Harrison
4) Benjamin Harrell
5) Martin Blount



Item 7.01 Regulation FD Disclosure

The Private Placement Memorandum dated February 14, 2014, attached as Exhibit 99.2, is incorporated herein by reference. In accordance with General Instruction B.2 of Form 8-K, the information reported under this Item 7.01 of Form 8-K, including Exhibit 99.2, is being furnished and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.



Item 8.01 Other Events

On April 2, 2014, the Company issued a press release announcing the offering of the Debentures, the First Closing and the appointment of Mr. Arneault. A copy of the press release is annexed to this Current Report on Form 8-K as Exhibit 99.1.




Item 9.01 Financial Statements and Exhibits

(d) Exhibits

4.1      Form of First Tranche Collateralized Convertible Senior Debenture
4.2      Form of Second Tranche Collateralized Convertible Senior Debenture
4.3      Form of Third Tranche Collateralized Convertible Senior Debenture
10.1     Form of Subscription Agreement
99.1     Diamondhead Casino Corporation Press Release dated April 2, 2014
99.2     Private Placement Memorandum Dated February 14, 2014

Forward-Looking Statements

This Current Report on Form 8-K contains forward-looking statements, which can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "project," "estimate," "intend," "continue" or "believe" or the negatives thereof or other variations thereon or comparable terminology. Investors are cautioned that forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those contemplated in the forward-looking statements. Such risks include, but are not limited to, the risks and uncertainties outlined in the Private Placement Memorandum furnished under Item 7.01 of this Current Report on Form 8-K. All forward-looking statements and other information in this Current Report on Form 8-K are based upon information available as of the date of this Report. Such information may change or become invalid after the date of this Current Report, and, by making these forward-looking statements, the Company undertakes no obligation to update these statements after the date of this Current Report, except as required by law.


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